Wednesday Wisdom: Shipping Market Looking Forward

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Cosco Shipping’s acquisition of Orient Overseas International marking what is possibly the last major M&A deal to take place in the industry has inspired this week's Wednesday Wisdom.

The interesting extract from one of PTI's technical papers comes from Peter Sand, Chief Shipping Analyst, BIMCO.

The technical paper ‘The Shipping Market In 2016 And Looking Forward’ weighs the container, tanker and dry bulk sectors against the global economy to provide insight into the challenges that many players in the industry should be prepared for.

Generally, the container shipping industry has found it difficult to adapt to the new normal where demand grows by a multiple of global GDP growth of one or even below, unlike the multiplier of two or more experienced year on year in the past.

Nevertheless, market conditions ended up improving in 2016 as fleet growth was lower than demand growth, the first time since 2010.

BIMCO expects the container shipping segment to see a net fleet growth of around 3.1% in 2017 (1.1% in 2016E).

If the multiplier gets back to one, and the IMF forecast of 3.4% becomes reality, the market will neither improve nor worsen in 2017.

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